A report that is set to be published this Thursday by the Credit Services Association will call for the banks to instruct debt collection firms in order to help recover unpaid Bounce Back Loans from businesses across the UK. The treasury is being pushed on how they can reduce taxpayer losses from the scheme which was launched back in May 2020.
The Bounce Back Loan scheme has lent to more than 1.4m businesses across the UK saving most businesses from closing when the pandemic struck. There have been widespread reports of Bounce Back Loan fraud with the scheme being abused by many on a national scale.
It’s been reported that up to 60% of Bounce Back Loans are expected to default according to the National Audit Office. The banks have the job are recovering the loans initially and can make a claim from the Government after going through ‘appropriate ‘ recovery processes.
I have had a few enquiries recently asking if a Ltd company will be able to be struck off if the company has taken a Bounce Back Loan, we think this is highly unlikely an objection will be raised before the company gets dissolved.
The report on Thursday is going to urge the Government to work with debt collectors if their initial recovery attempts fail. An article in the press yesterday suggested that ‘communicating with borrowers early and sensitively would increase recoveries by up to £6 billion’.
Already we have seen changes with Bounce Back Loan repayment terms being changed from 6 to 10 years to help ease the burden of UK businesses and I’m sure there are set to be further interesting developments in the coming months.
One thing is for sure, the bank and the Government are going want to collect as much money as possible over the next few years to help minimise losses. It’s going to be interesting to see what happens to companies that falsified their turnovers and claimed Bounce Back Loans when they shouldn’t of done.
If your Ltd company took a Bounce Back Loan and is going to struggle to make repayments when they fall due later this year it’s really important that you get some advice early.